Turkey's Banking Regulator Takes Control of Bank Asya

Turkey's Banking Regulator Takes Control of Bank Asya

Banking regulator of Turkey has taken control of Bank Asya affiliated with a moderate Islamic movement which is locked in a bitter dispute with the government. According to Bank Asya, its operations would not to be affected.

According to the Banking Regulation and Supervision Agency, saving deposit insurance fund of country had seized control of Bank Asya's management, appointing a new CEO and board. The agency cited insufficient transparency to enable allow for accurate regulation of the bank.

The moves arrived amid a government crackdown on the movement that led by US based cleric Fethullah Gulen, which President Recep Tayyip Erdogan accuses of orchestrating a corruption probe in 2014.

An arrest warrant has been issued by Turkish authorities for Gulen accusing him of plotting against the government. According to officials, they will look for his extradition from the US. Savings Deposit Insurance Fund will use 63% of the shares that belongs to the group of shareholders that select the management board of bank.

The fund is going to exercise all rights of the shareholders, excluding receiving dividends until the bank provides documents that the BDDK ask. An evaluative review by the banking regulator is finish. The Savings Deposit Insurance Fund only took over the management and Bank Asya carry on its banking activities as usual.

"The institution has not presented a partnership structure that is transparent and open enough to allow for effective regulation", the regulator said in a statement on its website.

Osman Akyuz, Islamic lenders' association general secretary said that this action is not going to create systemic risk for the banking sector.

According to media reports, depositors of Bank Asya involving state-owned firms and institutions withdrew about 4 billion lira in 2014. Back in November, Bank Asya reduced a third of its workforce and over a quarter of its branches in a turnaround try.

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